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TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1277
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.... Excise Department. Shir Avdesh Gopal Agarwal is proprietor of the appellant firm. The firm was availing SSI exemption Notification No.9/200-CE dated 01.03.2000 and its succeeding notifications. 3. There is another firm by the name of M/s Mascot Chemicals located in Shamli, U.P, which is engaged in the manufacture of thinner. Shri Avdhesh Gopal Agarwal was the proprietor of Mascot Chemicals till 31.12.2000. With effect from 01.01.2001, M/s Mascot Chemicals was converted into a partnership firm, the partners being Shri Avdhesh Gopal Agarwal (60% share) and his wife, Smt. Niti Agarwal (40% share). The firm was also availing SSI exemption Notification No. 9/2000-CE dated 01.03.2000 and its succeeding notifications. 4. Local Central Excise officers visited the factory premises of the appellants on 16.01.2002 and carried out certain investigations relating to alleged misclassification of two of their products- Chemisol - 35 and Chemisol - 38. On the issue of misclassification the differential duty alleged was Rs. 48,51,929/- for the period January 2002 to March 2004. On the basis of investigations' the departmental officers were also of the, prima facie, view that M/s Mascot Chemicals....
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.... Rs. 2,06,21,919/- for the year 2000-2001. Similarly, the clearance value taken for M/s Mascot Chemicals for the year 2000-2001, in Annexure-IV to the show cause notice, is Rs. 94,87,800/-. But the correct sales figures of manufactured goods should be Rs. 87,65,600/- (clearance form 1.04.2000 to 31.12.2000) + Rs. 9,00,200/- (clearances from 01.01.2001 to 31.03.2001) less Rs. 2,38,000/- (being trading sales for the year 2000-2001) = Rs. 94,27,800/-. These figures are obvious from para 4.2 of the show cause notice. Since duty is proposed to be charged on this value of clearances, this value is to be treated as cum-duty value and taking rate of duty as 16% during the period of dispute assessable value come to Rs. 81,79,138/-. This, when added to the figures of clearances of Rs. 2,06,21,919/- relating to M/s Chemicos, the total clearance value for the two units, taken together for the year 2000-2001, comes to Rs. 2,88,01,057/-, which is below the threshold limit of Rs. 3 Crores for availing SSI exemption. B. During the year 2000-2001, M/s Mascot Chemicals were under the proprietorship of Shri Avdhesh Agarwal only up to 31.12.2000. Hence, clearance values of M/s Chemicos (the appellan....
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.... common employees, no common factory premises, no financial flow back from M/s Mascot Chemicals to the appellant. The only relationship between the two was a commercial relationship where bulk of the raw material of M/s Mascot Chemicals were being bought from the appellants on payment of appropriate price including Central Excise duty. Hence, M/s Mascot Chemicals cannot be considered to be a 'dummy' of the appellants, particularly form 01.01.2001 and, therefore, the question of clubbing their clearances does not arise. H. For determining the aggregate value of clearances under the relevant SSI Notification, all clearances made by a manufacturer form one or more factories or that of one or more manufacturer from a particular factory, are to be considered. In the instant case neither of the two factories were being operated by more than one manufacturer during a financial year. This means that the department has considered the case of the appellants as that of a manufacturer clearing goods from one or more factory. In other words, the department has considered the appellants as well as M/s Mascot Chemicals as one manufacturer for clubbing the clearances from both the factories/unit....
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....The demand is time barred as the show cause notice has been issued on 24.03.2005 for the period 2000-2001 to 2003-2004. At best, this is a matter relating to interpretation of law as to whether clearances of two firms, with the proprietor of one firm being a partner in the other, is sufficient to justify clubbing clearance of the two units. There is no evidence to show that the appellants consciously and deliberately concealed or suppressed any information to evade duty. N. Since, this is not a case of deliberate attempt to evade duty, no penalty is called for, either on the appellants or its Proprietor, Shri Avdhesh Gopal Agarwal. In any case, penalty cannot be imposed both on the proprietary concern, M/s Chemicos, as well as its proprietor, Shri Avdhesh Gopal Agarwal. 10. Learned DR appearing for the Revenue reiterated the reasoning of the Adjudicating Authority and held that the two units were created for a mala fide intention to avail the benefit of small scale exemption notification. 11. After carefully considering the submissions made by both the sides as also after going through the impugned order of the Commissioner, we find that the main reason for the Commissioner to ....
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....plete by themselves and are working as an independent unit, both are separately entitled to the benefit of small scale exemption notification. Even if the Revenue's contentions that the second partnership unit was created with an intention to avail the small scale benefit is accepted, the said action on the part of the manufacture cannot lead to the clubbing of the clearances of both the units inasmuch as the law permits every person to do his business with another partner even if he already has a proprietary unit in his name. The business activities of a person cannot be curbed down on the ground that he is already engaged in the business under the name and style of his proprietary unit and cannot be a partner in the other unit. The only situation where the clearances of two units can be clubbed is when both the unit either belong to the same manufacturer or are not fully equipped to manufacture the goods and the clearances are being bifurcated in a pseudo manner. As long as the proprietary and the partnership unit are completely independent units having independent factory and are fully equipped with the machinery to manufacture the goods, the same cannot be held to be a dummy of....